Pays For Your Care and Pays Your Heirs

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This is the Truth Network. Welcome to Finishing Well, brought to you by CardinalGuide.com, with certified financial planner Hans Scheil, best-selling author and financial planner helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes. Now let's get started with Finishing Well. All right, get ready.

It's coming at you. The two-for-one show you've been waiting for in Finishing Well. This one is Pays Your Heirs and Pays for Your Care, or you could say it Pays for Your Care and Pays Your Heirs. You can go either way, because it does both, and as you think about that, it's the best of both worlds. Well, you may not know this, but it's really, really cool that the Jews have taught for years that salt is kind of the best of both worlds, and that it does two things that only salt does that works with both fire and water. And here's how it works, that you might know that obviously salt has an effect on water that only salt does, like it turns ice into water, right? It turns ice back into water, and if you put salt in the water, it doesn't turn back into ice, you know, that whole thing. But it also affects heat, because it keeps things from rotting. And so when you think about it, it does two things at the same time, and it was no accident at all that obviously they had to have covenants of salt, you know, so much in the old, but you and me, that we're tall, right?

Because we're supposed to be working in the world, and we're supposed to be a preservative, but by the same time making people thirsty for the water of the word of God, I mean how wonderful is that? And so, I know you're anxious to hear about this page for your care, I know I am, because this is some really cool stuff that as interest rates change, all of a sudden benefits change, and wow, there's some really still cool stuff coming out with this. Well there is. So today we're talking about a life long-term care policy, as opposed to, we were talking about an annuity a few weeks ago, and then a lot of the products that we were talking about in the past, it's a life insurance policy, it's a long-term care policy, it's pretty much a long-term care policy first, that's why you're buying it, and if you don't use it, or you don't use it all up, it's going to pay a death benefit to your heirs. That's what a life long-term care policy is. This is the same thing, but from a different company with different features, and we've never talked about this one on finishing well, okay?

Yeah, because it's a both-fer. The biggest thing that it has going for it, and it has a lot of things going for it, but the biggest one is it pays off for the long-term care as an indemnity. Now you say, what in the world is an indemnity? An indemnity versus a reimbursement. So let's just say, like in one of our examples, we've got for a man, it pays $6,470 a month for long-term care.

Every month, that's $77,648 a year that it's going to pay for long-term care. In order to collect that, all you need to do is prove to the insurance company that you need care. And in the beginning, you need a plan of care, whether that's at home or in a facility. So you're going to need a written plan of care signed by a licensed social worker.

It's going to need to state that you need the care, that you can't do two of the six ADLs, activities of daily living, or you're cognitively impaired. So it's the same business of getting a claim paid, but the difference is you don't have to send any receipts and prove to the insurance company that you spent the money on something that was acceptable to them. They just send you a check. You spend it on anything you want, which could be paying a family member. It could be hiring somebody from your church, hiring somebody that's going to come in and stay with you on vacation while your family member's on vacation.

I mean, you do whatever you want. It could be bringing an apparatus to your house. It could be paying your daughter to take time off from her job.

You name it, they're not going to get involved in that. And so it's an indemnity benefit, which makes it wonderful for some people. Now, most people are going to, like me, I don't have an indemnity on my policy because it really wasn't made available to me. And frankly, I'm going to hire a home healthcare agency anyhow. So I'm not going to hire a private nurse or something like that. So I'm just going to send in receipts. So I don't want to make that like it's an absolutely necessary benefit, but it's nice. And there are some people who want, that's what they want. And within the tax law, you can buy a policy like this for as much as $12,000 a month of benefit and receive that.

It's actually more than that, but let's just use 12,000. Send in no receipts and it all comes to you tax-free because you qualify for care and you're under the monthly limit. They just send you the indemnity benefit. You also could start out not as bad off as you're later going to get, and you could only spend half that money on getting care, and then you could just bank the other half in your bank so that down the road, when you are spending more than you're getting, you'll have it there in reserve.

I mean, there's all kinds of... Darrell Bock Right. In fact, since my short-term policy is that kind, I've always thought that, well, you could pay for so much care but use the extra to reimburse family members who are coming to visit you for the gas or whatever it is that you, you know, the nice thing is now you figure out what this is really costing people and you get to decide what you're going to do with the money. So I love, love, love that personally.

Steve McLaughlin So it's a great benefit, but it has more than that. So in this case, we're showing a 65-year-old female and a 65-year-old male, which we do in a lot of our examples, and we're using $100,000 single premium, but they're each paying that. So this is separate policies. And so unlike some of the examples where we use where we put you on the same policy, separate policies, and we're using $100,000 as the amount as we do on a lot of examples because it's pretty easy to just double it, have it, put in $50,000. I mean, you can, you can play with the numbers in the illustration. I'll also point out to you that on cardinalguide.com, the show notes for the video are right there for this show, which is pays you, pays your care, pays your heirs.

It's also on YouTube, the whole video's there with the show notes. So if you want to go get those and look at the actual illustrations in these examples, there's little chance these are going to be exactly your age or your health or whatever, but it'll at least give you, give you a picture of the thing. Now, this is a case where women pay more than men for life insurance because of the long-term care element. I mean, usually it's the other way around when you're messing with life insurance is that men have to pay more than women, but women are more likely to use long-term care, and consequently, you get a smaller benefit for your $100,000. So in the woman's case for $100,000, she's going to get $5,626 a month of long-term care benefit. That's $67,000 annually, and it has a maximum because it pays for eight years of $540,000. Now, understand, if you have substantial resources, you could put $200,000 into this thing, and then your maximum benefit would be over a million dollars, and your monthly benefit would be over 10 grand. So just understand we're using $100,000 as an example, but these would be a very satisfactory amount. For the man here, he's going to get $6,470 a month of benefit, $77,000 annually, and a total of $621,000 of potential benefit, all for his $100,000 single premium.

Pretty sweet. Now, if a couple buys this, for starters, they're going to get a discount, or in other words, if you're married, even if just one of you buys it. So if I have a 65-year-old lady that buys this, and her husband doesn't, but she is married, she's going to get more benefit. She's going to get about 10% more benefit than the $5,626 a month.

She's going to get like $6,100. And that's recognizing the fact that people that are married and live as a couple, they cost the long-term care company less. In other words, they rely on each other for enough, it's proven, or maybe they stay in a little better health, whatever the case may be. So if you're married, you're going to get a little better deal. But I'm showing this, like this couple buys this and they both put $100,000 in here, they're going to get a little more than I stated of benefits. And then the added benefit is if one of them passes away in their 70s, and the other one lives long into their 80s and 90s, well, and the one that passed away in their 70s didn't use much or any of the long-term care, there's going to be a death benefit, like if it was the lady of $135,000 going to the man, or vice versa, his death benefit is $155,000 going to her. And she's going to need that as a widow. So now she's going to have the cash, which is significantly in excess of the $100,000 they put in there. And then it's all going to come to her tax-free, and she's going to have that plus the long-term care benefit. And she's going to need all that because she's going to be cut down to one social security check and you have to pay higher tax rates when you're a single person or you're going to get into higher brackets quicker.

So that's a benefit. Now let's say that he died in his 70s, she lives to her 90s, so she receives that benefit. But let's say that he used up the long-term care. He was in there for the full eight years and just had a stroke, was at home for three or four years, had to go to the assisted living, and then this thing pays out a lot, pays out its maximum benefit or close to it. Life insurance is long since used up. There's still a $10,000 residual life insurance benefit in this thing.

So it's just a different company, different. That's what we meant. It says pays for your care, pays for your air.

So even though life insurance was used up, your air is still going to get $10,000 or even in the case that you just described where the man didn't use much, she got 150 from that policy, but then she got care for the next 10 years, and then her air still got $10,000 at the end of that, right? Right. Right. So that's just a residual benefit. And a number of the other ones that we sell, they don't have that residual benefit. You use up your life insurance on the front end. And one where we sell, we're putting them both on the same policy, there's no death benefit to the second death. So there are times when we get with a client, they want to hear about this, and then they've already been shown that other one, which has its benefits.

So it's a bad day for us when we start comparing these things. It's a lot to think about and so much the reason you need to go to cardinalguide.com and click on the Seven Worries tab. And today we're talking about long term care. And you can see the show notes on this particular product. And we got the annuity product we did a few weeks ago. And so there's just tons of information.

All the more reason you can just go to contact Hans, you know, dial 1-800-HANDS. That's at cardinalguide.com, as well as his email address and the book, The Complete Cardinal Guide to Planning for and Living Your Retirement, all there at cardinalguide.com. We'll be right back with a whole lot more of Pays for Your Care, Pays Your Heirs. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well with my good friend and financial planner, Hans Scheil, which by the way, I mentioned call 1-800-HANDS.

I understand that Tom had a call, somebody called that, and that is not official. No, the number to call Hans is at cardinalguide.com. No, call 1-800-HANDS. I'll just tell them what it is.

It's 919-535-8261. Okay, there you go. I feel badly that I sent somebody astray. Well they actually reached us though. That's good.

Okay. So it eventually worked. But nonetheless, we're at today's show and we're talking about the best of two, both worlds, right? Pays for your care and pays your heirs, always in this particular policy. Very cool that even if you use up all the benefits of the home healthcare, they still will pay your heirs $10,000 in any situation. So it really is the best of both worlds. But there's also, and there's more. Well yeah, and the main thing is the indemnity benefit, that you're going to get a check paying for informal care, relatives, anything you want to spend it on.

That's the thing that attracts people to this. And the last benefit, the international benefit, that comes into play here. I mean, you don't collect as much or as easily, so I'm just going to kind of leave it at that. They're going to limit the benefits, but not severely limit them. I'll explain that in person to you. But it pays internationally, where a number of the policies that we offer don't.

And you know, there's really a few kinds of categories. There's people that live in the US that say when I retire, I'm going to Mexico, I'm going to England, I'm going to wherever, and I'm going to retire there. The cost of living in Costa Rica is a lot less. And I want to have long term care insurance that's going to pay me there. Or if I want to move back, then it'll pay its full benefit.

Here you go. Because it's just going to pay the indemnity and you're not trying to send in receipts from Costa Rica. You didn't say Ravi, Alaska is in America, but that came to me after I said it.

Sure. Well, then there's the people that are from Greece or from somewhere, somewhere in Europe or Southeast Asia or wherever, and they want to go back home after they get done with their job. And they don't really want to hunt down long term care insurance in a foreign country. And it won't be foreign to them once they're living there. But they want to bring some long term care insurance from the US there. This policy works for that.

Okay, that's cool. So what we want to really use the rest of the show is I wanted to just talk to everybody about the importance of having a plan in place of knowing what your family's going to do. If you all of a sudden need care. And presumably that care is going to be expensive. And the biggest objection that I get is from people is they're going to say, Well, I'll just pay for it myself. You know, you're looking at my assets, I'm the financial planner, I'm directing them on a number of other things. And people that give that to me in a hard way. I'm kind of like, Okay, I'm just going to put that down in my file that Joe told me, I will pay for this, you know, Joe will pay for this himself. And I want to be covered when I'm talking to his kids, 20 years from now, or I probably be in the same boat as Joe, but Tom needs to be covered that says, you know, we talked to him about this. But I want to open that up.

And I want to just talk about it a little bit. Many of these people do have the money to pay for their own care. That's so it's a, it's a very legitimate thing to say.

And I would have a few things to say to that, is that what you really wanted to do with your, you know, with your reserves and your assets, I mean, and that's kind of a simple kind of flippant response. Because that doesn't usually get the discussion anywhere, but it still is factual to bring up the most important one that does change a few people I've worked with Mr. Big Bucks, who maybe I wasn't the one that tried to sell him long term care 25 years ago. But I'm now working with their kids. And I'm in there because he needs long term care.

He's still Mr. Big Bucks. And now he needs care at home and he needs it real bad. And his daughter is trying to set it up. And, you know, what does she know about pulling it? Do we pull out pre tax money? Do we pull it out of the IRA?

Do we, which mutual funds do we sell? And then we got to get it by him. You know, last week, he threw the people out of there. I mean, we had an example with Robbie's father where he did exactly that. He just, yeah, he kicked him out of there.

He kicked him out of there. He just, all they do is watch TV, and they're just chitty chatting. And, you know, that's how people think. And so people that have money and resources are really hard at 85 to talk them into using those resources or spending them. That's kind of why they have it in the first place, when they very much this is necessary, and to take the burden off of their daughter. And if these folks have insurance, they're all for it, man, bring them in, make that insurance company pay. But when they're paying that out of their pocket, even if they have millions, it's an issue.

So I just want you to think about your 85 year old self, and think about how cooperative you're going to be in actually paying for it yourself, and how able and capable your daughter is going to be, or son of spending, helping you spend your own money to get care. So that's what I'd have to say to that. The next biggest objection that we get to this is my kids will take care of me.

And, or my wife will take care of me, or my husband will take care of me, or somebody's going to take care of me. And that's as far as they've gone with it. They just, that's the way we've always done. That's what they did with my grandparents.

And I'm just telling you, you dress that back. I mean, most likely your daughter and son, or daughter or son, they got jobs right now. And we're not, you know, we're talking about maybe 10, 15, 20 years from now, you know, they're going to be approaching your age. But they got stuff to do that a lot of them live in a different city. They have kids of their own, jobs of their own. That's not real practical. And the people that are relying on the spouse, I have a lot of those. Think about some short term care at the very least for the spouse or the kids is if you get a year's worth of coverage, that that'll give us that'll give us some time to figure out and at least you can sample this on the insurance company's way.

So you're paying for it yourself in the 13th month. That's a lot easier to work with with people. Just think about how practical your things are. I mean, you know, in my case, when I'm 85, you know, if I make it there and need and care, my wife's going to be 83.

And you know, if you've ever taken a look at me on the videos, I'm not the easiest guy to pick up and move around, especially for a frail, older lady. I mean, it just so yeah, and I you know, I just remember, unfortunately, you know, with my dad, he got to the point where his mind was not what it once was. And he was a brilliant man. But he started to make poor decisions from a standpoint of his own care. And it was fascinating to me, he would not listen to a thing I had to say, but bring in a nurse or a doctor or somebody that was a skilled worker.

And all of a sudden, he started to do stuff that he should be doing. And again, take a look at your old self like, like Robbie, you know, you're, when you get to that point, you're not going to be thinking all that straight. And believe it or not, you may not listen to your son or daughter who have really good advice about how to take care of yourself, because then what happened in the case of my mother-in-law is when she didn't necessarily take that advice of my wife and all that, then that riddled my wife with guilt for, you know, the things that she felt like she wasn't caring for her mother, right, and all that, and you leaving yourself wide open, right, is what I saw in both cases, leaving yourself wide open for all this family trauma, that really, if there were people that were qualified to be in there doing the stuff, you know, would have taken pressure off your family, and would have been able to talk to your 85-year-old self, you know, because you listen. But you know, we unfortunately don't necessarily listen to our kids and stuff.

You know what I'm saying? Well, absolutely. And I guess the final thing that I want to say is, you know, I'm a financial planner, I'm a CFP, and I help people make what I think are wise financial decisions. And if you're one of these people that say, as much as this stuff costs, I'll just pay for it myself, well, take a look at some of these hybrid policies, and see how you can transfer some of your money, where it is now, into the insurance company, it's still your money, it still has a cash value.

It's still you haven't paid the money out the door. And it provides a much larger life insurance benefit. So, you know, this is one of those have your cake and eat it too, is if you need the care, you're going to be very pleased that you bought this policy. If you don't need the care, you're not going to know you didn't need the care because you're going to be deceased, but a larger benefit that you put in there is going to go to your kids. And, you know, if you need some care, then, you know, some benefit, but these hybrids, single premium, lump sum, life insurance or annuity, long term care benefit that pays, if you don't use it all up to your beneficiaries are a form of self insurance. Yeah, and there you go, because that's the other objection that we hear clearly is, you know, if I never use this stuff, then I've wasted that money.

Well, that's not necessarily the case for everyone. And I really think that when you're looking, you know, and for me, obviously, I believe, and I've written checks for it at this point in my life, that this is a critical part of finishing well. So again, we've run out of time before we ran out of show. And we want to by all means remind you that the show is brought to you by Cardinal Guide, cardinalguide.com. And there you can get Hans's email address and that phone number he gave out. And where you can contact Hans, find out about how this fits for you personally, as well as the Seven Worries tab, which includes, of course, long term care with the show notes on the policies that we described today, and all sorts of stuff we've done on those issues, as long as all as well as Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement. Great show, Hans. Thanks.

Yeah, thank you and God bless you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such.

Any statements or opinions are subject to change without notice. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation.

Finishing well is designed to provide accurate and authoritative information with regard to the subject covered. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. We hope you enjoyed Finishing Well, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Hans' bestselling book, The Complete Cardinal Guide to Planning for and Living in Retirement and The Workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on The Finishing Well radio show on the website and send us a word. Once again, that's CardinalGuide.com. CardinalGuide.com. This is the Truth Network.